What happened
Shares of AMC Entertainment Holdings (NYSE:AMC) rose on Monday after Walt Disney (NYSE:DIS) said it would release its upcoming films exclusively in theaters for the rest of this year.
As of 1:22 p.m. EDT today, AMC's stock price was up more than 4%.
So what
With many theaters forced to close during the early stages of the pandemic due to social distancing guidelines, Disney began to release some of its movies on its popular Disney+ streaming platform. Even after health officials eased COVID-19 restrictions and theaters began to reopen, Disney made some of its biggest blockbusters available on Disney+ on the same day they hit theaters.
However, following the impressive box office performance of Shang-Chi and the Legend of the 10 Rings, Disney is returning to its traditional theater-first release strategy.
Image source: Getty Images.
Now what
It's easy to see why Disney reversed its approach. The entertainment giant's latest Marvel film has already grossed almost $250 million during just its first two weeks in theaters. These surprisingly strong results show that people are returning to theaters in droves, despite the prevalence of COVID.
A recovery in theater traffic is certainly good news for AMC. Rebounding attendance could help boost sales at a time when the theater chain is struggling to service its burdensome debt load.
Moreover, Disney's decision to prioritize theater releases could drive other studios to do the same with their forthcoming films.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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September 14, 2021 at 01:05AM
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